Gold Bulls Endure Bear Market as Goldman Says Sell (Bloomberg)
Monday April 15th, 2013
Hedge funds and other speculators added to bullish gold bets as the metal slumped into a bear market and Goldman Sachs Group Inc. warned the retreat is accelerating after the longest rally in nine decades.
The investors increased net-long positions by 19 percent to 56,084 futures and options in the week ended April 9, the first gain in three weeks, U.S. Commodity Futures Trading Commission data show. That contrasts with a 7.9 percent decline in bullish wagers across 18 U.S.-traded raw materials, which fell to a five-week low of 431,581 contracts. Holdings in agriculture dropped to the lowest since September 2006.
The turn in the gold cycle is quickening and investors should sell the metal, Goldman Sachs said in an April 10 recommendation that returned 5.4 percent in three days. Gold retreated as the Standard & Poor’s GSCI Index of 24 raw materials fell to a nine-month low, extending a slump that Citigroup Inc. said marks the “death bell” for the supercycle, or longer-than-average period of rising prices. Global equities advanced to the highest since June 2008 as U.S. stocks reached a record.
“Anybody who did some buying before this big drop is probably in some pain,” said Donald Selkin, who helps manage about $3 billion of assets as chief market strategist at National Securities Corp. in New York. “The perception is that gold is not really needed as a safe haven. People are looking at the stock market and they’re stunned, and there’s no inflation. So people are saying ‘What do we need gold for?’”